Conrad Onyango

last updated Mon, May 22, 2023 8:43 PM

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After a disastrous 2022, Africa's healthcare startups' funding grows rapidly

By Conrad Onyango
| Updated 20:43 22/05/2023
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Interest in funding Africa's health-tech startups is steadily increasing as investors seek solutions that improve supply-chain challenges.

Between January and April 2023, startups in health technology were the only African startup sector that witnessed a rise in fundraising following years of fast and across-the-board growth in African startup funding, says The Big Deal, a database on startup funding in Africa.

There was a 7% year-on-year growth in funding into health tech startups, compared to decreases in fintech (which saw a 19% drop) and energy startups (a 5% drop), Africa's two most funded sectors.

"Healthcare takes third spot (up from eighth position at the same time last year), being the only sector recording positive year-on-year growth, contrasting with the steep decline almost everywhere else,"  the Big Deal said.

In the first three months of 2023, funding to African tech startups decreased by 57.2%, amounting to $649 million from $1.5 billion in the previous year, data from Disrupt Africa shows.

By implication, only 87 startups have got funding during the time under consideration this year, a great decrease from 175 in the same period last year. It shows the impact of the difficult global economic environment that has scared foreign investors from long-term investment commitments since half of 2022.

The health-tech sector has remained strong, nonetheless, following a Covid pandemic-inspired drift to virtual healthcare responses.

The pan-African initiative, Investing In Innovation (i3) has launched a second call for 30 healthcare startups that will be linked to international investors, offering systemic grants of $50,000 and benefitting from tailored investment readiness support.

Backed by Bill Gates, the initiative's focus is women-led startups based in French-speaking African countries using data to make less expensive but quality health services accessible to patients.

"Local, data-driven innovators closest to delivery challenges can digitise supply chains in Africa to ensure they are resilient, agile, and responsive to the needs of patients," said Villgro Africa, incubator and impact investor on its website. 

At least 30 startups in 2022 benefitted from the programme to the tune of $7M.

And AAIC, a Japanese investment company, has also made some investments in Africa in 2023. In Egypt, it has built a subsidiary investing in local startups.

"We have also invested in four companies through our healthcare fund (as of March 2023), and we intend to continue to actively invest in the Egyptian market in light of its further potential," the company said.

In March, AAIC invested in a digital banking platform, Credable Group, through the Africa Innovation and Healthcare Fund 'to strengthen local safety nets and medical systems in African and Middle Eastern regions by expanding access to financial services.'

In February, Egypt's health tech startup, Yodawy, secured a $ 16 million Series B funding round to help expand its flagship e-prescription gateway touted as the first in the country. 

Less than two years after closing the Series A round, the startup has linked 20 leading health insurance firms, 3,000 pharmacies and over 300 corporate firms in Egypt through a national tech-powered infrastructure.

A similar development trend for 2022 can be seen in Kenya and Nigeria, where health startups are expanding distribution networks to bridge inequality in accessing medical products.

Salient Advisory's market intelligence report, Innovations in Digitizing Distribution of Health Products, showcases several entrepreneurs that have significantly expanded their distribution networks, affirming the growing investor interest in funding startups in this category.

"Investor interest in African health tech is growing, and regulations are evolving rapidly," said the report.

Startups listed include Shelf Life, which grew its network by more than four-fold from 400 to 1,633 outlets in Kenya and Nigeria and Lifestores Healthcare, which increased from 85 to 600 outlets in Nigeria.

Maisha Meds more than doubled, from 400 to 900 registered outlets in Kenya and Nigeria, while mPharma, grew from 500 to 850 outlets in nine countries by June 2022.

"These innovators are working with community pharmacies and lower-end providers such as drug shops that are often poorly served by incumbent large-scale distributors and a myriad of wholesalers," said the Salient Advisory report authors. 


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African health startups

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